A Russian court has ordered private equity fund Baring Vostok to give up control of Vostochny Bank, in a case that has shocked investors and led to the jailing of the firm’s American founder, Michael Calvey, RIA Novosti reports.
The ruling on Friday by the regional arbitration court in the Far Eastern city of Blagoveshchensk was the latest twist in a case that has raised questions about the rule of law and the investment climate in Russia.
The court, located on the Chinese border, about 8,000 kilometers east of Moscow, ordered Baring Vostok to sell a 9.9% stake in Vostochny Bank.
The recipient of the stake is a company whose owner, Artem Avetisian, and his partners were accused by Baring Vostok of stripping the assets of Vostochny. In a statement, Baring Vostok called the court’s ruling “unfounded,” and accused the court of not reviewing the evidence properly.
“Baring Vostok believes that this entire court process, including today’s ruling, has caused serious damage to the reputation of Russia’s system of arbitration justice,” the company said.
In February, Calvey, a prominent Moscow-based investor, and four others were arrested and charged of defrauding Vostochny in a related deal. The arrests stunned many Western investors and drew complaints from high-level Russian business leaders and government officials, who questioned the motivations of the courts and prosecutors.
A Moscow court in April ordered Calvey out of pretrial detention and ruled he be placed under house arrest, pending trial.
The issue of Calvey’s arrest has come up in talks between U.S. Secretary of State Mike Pompeo and Russian Foreign Minister Sergei Lavrov.
Calvey founded Moscow-based Baring Vostok in 1994. The company was an early, major investor in Russia’s dominant search engine, Yandex.